New regulations

Maritime code to be overhauled

The current Maritime Code of Vietnam was passed on June 30, 1990 by the VIIIth National Assembly of the Socialist Republic of Vietnam. Over the past fourteen years’ implementation, the Code has created favorable conditions for the maritime sector to discharge its task of serving the domestic flow of goods, contributing to boosting export and import as well as economic growth.

Yet, the Code has also revealed a number of limitations and shortcomings which need to be overcome in order to better serve the country in the period of industrialization and modernization and international integration.

I. CONTEXT OF THE COMING INTO BEING OF THE CODE

1. The 1990 Maritime Code of Vietnam was drafted and passed at a time when the Communist Party of Vietnam embarked on the implementation of the renewal (doi moi) policy. By then, when the notion of a market economy remained unclear, the private economic sector was already permitted to do business in sea transport though still with a restricted scope of operating seagoing ships, especially along overseas routes. These restrictions can be seen in the Code.

Moreover, under the Code, only permanent Vietnamese residents, not overseas Vietnamese, have been allowed to register their ships in the country.

2. The Code was drafted and passed at a time when Vietnam’s legal system was incomplete. Since the passage of the Code, the first economic law in Vietnam, over 100 codes, laws and ordinances, including the Civil Code, the Labor Code, the Environmental Protection Law, the Insurance Business Law… have been promulgated. Besides, in those days, other law branches remained undeveloped while private international law was not yet formed in Vietnam.

3. The Code was compiled at a time when Vietnam’s maritime transport was not yet strongly developed. The study of international maritime conventions, such as those of the United Nations, the International Maritime Organization (IMO) and the Comite Maritime International (CMI), was not comprehensive and thorough, resulting in the inclusion of some unenforceable provisions in the Code. This has caused not a few difficulties to Vietnamese shipping enterprises, cargo owners as well as law enforcement bodies. Besides, since 1990, many international conventions have been constantly revised or newly adopted, constituting a considerable source of international maritime law.

4. The Code was formulated at a time when maritime terms were not yet fully studied or were differently interpreted, so it could not give the definitions of many maritime terms.

5. By the end of 1992, only State-owned seaport enterprises had operated in Vietnam, including ports managed by the Transport Ministry and localities, and special-use ports managed by other ministries and branches. Meanwhile, foreign cooperation and investment in the port domain was minimal. In that period, the view on clear separation between State management and business was already accepted, so port authorities were separated from port enterprises. However, due to an incomplete perception of the model of port authorities, the Code has only provided for State authorities in charge of managing maritime activities in seaport waters. It contains no provisions on authorities performing State management over maritime activities in seaport land areas.

6. The Code was drafted at a time when multimodal transport, an advanced transport mode, was not yet strongly developed in Vietnam. For this reason, multimodal transport is not mentioned in the Code.

II. BASIC CONTENTS OF THE CODE

The current Code comprises 18 chapters with 244 articles. Each chapter constitutes a separate institution regulating legal relations arising in a specific domain of maritime activity, such as seagoing ships, shipcrew, maritime services, cargo and passenger carriage. The Code also covers the resolution of maritime disputes and arrest of ships and lays down principles on the selection of applicable laws in case of law conflicts. For it has been formulated on the basis of the provisions of relevant international conventions and international maritime practices, the contents of the Code are of a high international character, creating a legal corridor for maritime activities, helping Vietnamese and foreign enterprises self-regulate their business activities in compliance with laws.

1. On the use of seagoing ships:

Chapters I, II, III, V and VI of the Code all contain provisions on the use of seagoing ships, covering from seagoing ships, crewmen working onboard seagoing ships, cargo and passenger carriage contracts, ship charter parties to the prevention of pollution from ships, with the following basic contents:

a/ Provisions on seagoing ships:

– The concept of shipowner, seagoing ship registration conditions, deletion of seagoing ship registration in Vietnam, conditions for seagoing ships owned by Vietnamese organizations or individuals to be registered abroad.

– The mechanism of protection of Vietnamese seagoing ships in the transport of cargoes between Vietnamese seaports, a mechanism applied by all maritime states (cabotage law).

– Measures to ensure maritime safety and responsibility for preventing and controlling marine pollution, for ships operating in the sea, especially oil and hazardous cargo carriers.

– Requirements for seagoing ships in the prevention of collusion.

– Seagoing ship capacity certificates and other papers of ships.

– Rights to ownership of seagoing ships, such as the rights to transfer, pledge, mortgage, maritime lien of seagoing ships, arrest of ships, and the courts’ jurisdiction over the arrest of seagoing ships.

– Seagoing ship business: general principles on bare-boat charter and time charter.

b/ Provisions on shipcrew: Criteria and duties of crewmen, working regime of crewmen, responsibilities of shipowners for crewmen, rights and responsibilities of captains with regard to ships and cargoes carried onboard ships.

– Contracts on cargo carriage by sea, rights and responsibilities of carriers in the process of carrying cargoes from loading places to unloading places, rights and responsibilities of shippers, bills of lading and cargo carriage documents; statute of limitations for making claims about the performance of carriage contracts, and about loss of cargoes carried under bills of lading.

– Liabilities of shipowners in the cargo carriage, such as compensation for cargo loss, compensation levels, cases of liability exemption, right to seize cargoes, compensation for general average, limitation of shipowners’ liability for cargo claims.

2. On seaports:

In the Code, the provisions on seaports and seaport management are included in Chapter IV on Seaports and Port Authorities. This chapter provides for:

– The concepts of seaport, seaport land areas; seaport waters and navigable zones.

– Authorities performing the State management over maritime shipping: competence and responsibilities of port authorities, serving as the basis for State management over maritime activities in seaports over the past time.

– Competence to publicize seaports, impose temporary bans on the ships’ entry into or exit from ports, and competence to promulgate regulations on maritime activities in seaport waters or navigable zones.

Provisions on the resolution of maritime disputes include those on the principles of selection of applicable laws in case of law conflicts (Chapter I), statute of limitations for lodging claims (in relevant chapters), courts’ jurisdiction over the resolution of maritime disputes (Chapter XVII) and over the arrest of ships (Chapter II).

So, it can be said that, with the above-said major contents, the Code has governed most of legal relations in maritime activities.

III. POSITIVE IMPACTS OF THE CODE

1. The Code has established the principles for the application of other laws in the cases not yet specified in the Code, permitting the application of international maritime practices and the selection of applicable laws in case of law conflicts, such as:

b/ The principle on mutual agreement on the application of foreign laws or international
maritime practices in maritime contractual relations involving at least one party being a foreign organization or individual and on the selection of arbitration or a court in either of the two countries or in a third country for the resolution of maritime disputes (Clause 2, Article 4);

c/ The principle on the application of international agreements which Vietnam has signed or acceded to in cases where such agreements contain provisions different from those of the Code (Article 6);

d/ The principle on mutual agreement on the application of foreign laws, provided that such laws are not contrary to Vietnamese laws (Article 7);

e/ The principle on the selection of applicable laws in case of law conflicts.
The above-said preeminent principles have enabled the parties to contractual maritime relations to take initiative in selecting applicable laws over the past years when Vietnam’s legal system remains incomplete. These principles have been and will still be suitable to Vietnam’s maritime activities in the process of international economic integration.

2. The Code has institutionalized many provisions of international conventions, which have been acceded to, or widely recognized, by many countries, such as those of IMO, CMI and the United Nations Conference on Trade and Development (UNCTAD) on cargo carriage by sea, shipowners’ civil liabilities, general average, collisions, shipcrew, seagoing ships, maritime insurance, etc. The Code has also included references to the maritime laws of such countries as the former Soviet union, Poland, Germany, Bulgaria, India… This has created favorable conditions for maritime activities in Vietnam.

3. Since the effective date of the Code, nearly 70 sub-law documents have been promulgated, guiding the implementation of the Code. Together with the Code, these documents have formed a basic legal framework for maritime shipping, regulating legal relations arising in maritime activities related to seagoing ships.

4. The Code has created a legal corridor for maritime activities, helping domestic and foreign enterprises freely operate within the prescribed framework, making their shipping activities to comply with law provisions.

5. The Code has served as a legal basis for the performance of the State management over maritime shipping, the discharge of the responsibilities of a coastal state and a port state (for checking ships’ activities in seaports), the responsibilities of a flag state (for issuing certificates to ships and professional certificates to crewmen), contributing to ensuring marine safety, security and order. It has also created a legal framework for the protection of the marine environment.

6. As most provisions of the Code are compliant with the maritime laws of other countries and international practices, the Code has been easily accepted by countries having their ships entering and leaving Vietnam’s seaports.

7. The Code has contributed to boosting the development of Vietnam’s transport sector
in particular and its economy in general.

IV. LIMITATIONS OF THE CODE

Over the past years, big changes have been observed in Vietnam’s economic as well as maritime activities, such as increasing volumes of goods exported and imported by sea. New requirements have arisen as the country is accelerating its international economic integration process. At the same time, the relevant international conventions have also undergone new developments. As a result, many provisions of the Code are no longer suitable while others need to be supplemented. Specifically:

1. Scope of application and subjects of regulation: The Code has only applied to Vietnamese seagoing ships and, only in specific cases, to foreign ones. This has caused a difficulty in the enforcement, for instance, in the arrest of foreign ships in Vietnam. As the Code only provides for the arrest of Vietnamese ships, Vietnamese courts cannot order the arrest of foreign ships in Vietnam. In this case, the courts must resort to civil procedures. Besides, the concept of seagoing ships is not specific enough, failing to clearly distinguish seagoing ships from other kinds of ships such as fishing ships, inland waterway means…

2. Terminology: Maritime terms have not yet been fully interpreted and used in a uniform way while many others are not yet included in the Code.

3. Resolution of maritime disputes: Many provisions on the resolution of maritime
disputes are unclear, even contradictory to those of the economic and civil procedure legislation, especially when it comes to the application of the statute of limitations for lawsuit initiation. This has caused difficulties to the concerned parties and adjudicating bodies as well.

4. The provisions on the use of the French gold franc for calculation of loss compensation and civil liabilities of shipowners are infeasible, for, in reality, Vietnamese banks cannot convert this currency into Vietnam dong. At present, only the special drawing rights (SDRs) is used by the International Monetary Fund, which can be converted in US dollar, then into Vietnam dong.

5. Sea transport:

a/ Provisions on seagoing ships: The provisions concerning seagoing ships and the use and operation of seagoing ships are insufficient, unclear, inappropriate or unable to govern all legal relations arising from reality. Some provisions are even contradictory. Following are some examples:

– Shipowner, as defined in the Code, is the owner of a seagoing ship. This concept is incomplete because in Vietnam seagoing ships of State-owned enterprises are State-owned assets assigned to such enterprises for management. They do not come under the ownership of the enterprises. So, in the registration of ships of State-owned enterprises, the determination of enterprises as shipowners is not compliant with the definition of State-owned assets.

– The Code’s Chapter on shipowners’ civil liability contains many contradictory and infeasible points, such as:

+ The currency used for compensation is also the French gold franc, which is no longer used worldwide.

+ The responsibility to prove one’s fault: It is prescribed in the Code that shipowners are obliged to prove that they are not at fault. This provision is not consonant with Vietnam’s procedural legislation according to which the complainants must prove that losses are caused due to the shipowners’ faults if they want to claim damages from the shipowners.

+ The provision on the establishment of a compensation fund when the compensated amount exceeds the liability limit is irrational because the shipowner concerned is only required to establish a compensation fund which does not exceed the sum to which the shipowner’s liability is limited for the release of his/her ship.
Besides, civil liabilities of ship charterers and ship operators have not yet been clearly specified.

– Provisions on the rights to maritime lien: The Code has no definition of maritime lien, thus resulting in different interpretations. The Code also fails to designate an agency to issue regulations on the order and procedures for exercising the rights to maritime lien. Moreover, it has not provided for the statute of limitations for initiation of lawsuits related to maritime lien.

– The definitions of pledge and mortgage are not consistent with the Civil Code.

– Provisions on the arrest of seagoing ships are incompliant with international maritime practices. The Code has provided that courts may arrest ships only after they have accepted the cases. This has caused hurdles to organizations or individuals in arresting ships, particularly foreign ones, in Vietnam. In order to issue a ship arrest warrant, the court must accept the case, which would take some time, while the arrest of a ship must be conducted quickly and secretly. References to international conventions on the arrest of seagoing ships and maritime laws of many countries show that ships may be arrested even in the cases where the courts receive claimants’ requests for ship arrest.

Besides, the Code has not designated an agency to issue regulations on the order and procedures for arresting seagoing ships in Vietnam. Until now there is still no legal document to this effect.

– Provisions on maritime safety and prevention of marine pollution are insufficient. Maritime security, an issue of concern to the international maritime community, has not yet been addressed. Legal grounds are also insufficient for the promulgation of sub-law documents on this issue.

– Policies on development of ship fleets: The Code has not yet laid down principles on development investment (purchase and sale of ships), the autonomy right of various economic sectors in the development and commercial operation of ships.

b/ Provisions on shipcrew: The Code lacks specific provisions on the working regime for crewmen, which has not yet been prescribed in the Labor Code, such as specific regulations on labor contracts signed with crewmen, contracts on the hire of crewmen, export of crewmen, working regime for crewmen, and so on.

c/ Provisions on contracts on cargo carriage by sea are either unclear, insufficient or unsuitable to the development of the relevant international conventions, such as:

– There still lack many definitions, like those of contractual carrier and de facto carrier.

– Provisions on cargo carriage under bills of lading and cargo carriage under shipment contracts are unclear.

– Provisions on the responsibilities of carriers and shipowners are contradictory.

– A number of provisions are no longer suitable to the present reality, incompliant with other laws and relevant international conventions, such as those on shipowners’ civil liabilities for maritime claims, the currency or the responsibility to prove one’s fault.

In the context of international economic integration and when Vietnamese fleets have been only able to transport about 15% of the export and import volume, the limits of civil liability of shipowners for maritime claims should be raised in order to protect the interests of Vietnamese exporters and importers and gain prestige for Vietnamese fleets.

6. On maritime services:

Many provisions on maritime services are no longer suitable, being infeasible and incompliant with the relevant international agreements, including:

+ Provisions on the liabilities of shipowners, rights of recoverers of sunken property and parties related to sunken property; the time limit related to recovery of sunken property, regime of payments for salvage efforts, maritime insurance….

+ Some new services in Vietnam, such as multimodal transport, logistics … have not yet been stipulated in the Code.

+ Lack of provisions on search and rescue.

7. On seaports:

The Code has no provisions on:

+ State management over maritime shipping and business activities conducted in seaports’ land areas.

+ Provisions on investment in the development of seaport infrastructure, management and lease of the commercial operation of seaport infrastructure, management of loading and unloading and storage services…

General principles on the resolution of maritime disputes (in Chapter XVII) have been laid down in the Code but they are unclear, difficult to understand, thus leading to difficult and irrational application of the Code and resolution of maritime disputes in Vietnam.

Generally speaking, though the Maritime Code of Vietnam has formed a legal framework for maritime activities in the country’s initial period of renewal and integration, it has revealed many inadequacies which need to be urgently addressed in order to facilitate the development of Vietnam’s national economy in general and its maritime sector in particular.

V. PROPOSED AMENDMENTS and SUPPLEMENTS

1. Principles for amendment and supplementation:

The Code should be revised on the following principles:

a/ Taking the existing Code as the main basis, amending and supplementing insufficient or unsuitable provisions, striving to embrace all relations established in current and future maritime activities but not those already governed by other laws.

b/ Compliance with the provisions of Vietnam’s legal system and international agreements which Vietnam has signed or acceded to, or widely recognized international maritime practices. As part of Vietnam’s legal system, the Code must be consistent with the provisions of the current legal system of Vietnam. Moreover, taking into consideration the high international character of maritime activities as well as the requirements of the international economic integration process, the revision of the Code must ensure compliance with international agreements which Vietnam has signed or acceded to and with widely-recognized international maritime practices.

c/ Assurance that the Code is open and stable, meeting all requirements of actual maritime activities as well as the development of Vietnam’s maritime sector along the direction of industrialization and modernization.

2. Revision orientations:

a/ On the name of the Code:

For the immediate future, the new Code should be called Vietnam Maritime Code (amended). If it has many contents amended and supplemented this time, then, when promulgated, it should be named Vietnam Maritime Code plus the year of promulgation, like the names of the amended constitutions.

b/ On structure:

The Code’s latest draft comprises the preamble and 19 chapters. Compared with the 1990 Code, the draft has 253 articles, of which:

– The number of articles unchanged: 23 (9.09%).

– The number of articles amended: 176 (67.57%).

– The number of new articles: 54 (21.34%).

c/ On amended contents:

The amended and supplemented contents can be seen mostly in three major areas: relations arising in the use of seagoing ships in sea transport, relations arising in the management and commercial operation of seaports, and relations arising from maritime services. These changes are included in the following chapters:

+ To amend the concept of seagoing ship, which should not include fishing ships and inland waterway means.

+ To amend the concept of shipowner to comply with the State Enterprise Law and suit the responsibilities of shipowners, ship operators and ship charterers in the chapters on civil liabilities of shipowners, recovery of sunken property.

+ Ownership rights: To include only those provisions specific to seagoing ships in the Code, avoid general provisions already existing in the Civil Code. To add such concepts as maritime lien, ship arrest, seagoing ship business (lease, purchase and sale…).

+ Maritime safety and prevention of environmental pollution: To add provisions on these matters in compliance with current international regulations. These provisions should be used as principles for the promulgation of sub-law documents.

2. Crew: To supplement those provisions specific to Vietnamese crewmen, their obligations, crew complement, responsibilities and powers of captains, obligations of organizations and individuals in the employment of crewmen, responsibilities of shipowners for arranging crews, ensuring the working regime and living conditions for crewmen working onboard seagoing ships, etc.

+ Supplementing concepts and definitions: carrier, de facto carrier, responsibilities of carriers, including journeys before and after the voyage, in line with the common trends of international conventions.

4. Passenger carriage by sea: To amend provisions in the spirit of the 1974 Athens Convention on the Carriage of Passengers and Their Luggage by Sea and supplementary protocols of 1976, 1990…

– On seaports: To add the following provisions, pending the availability of a separate law on seaports:

+ Provisions on seaports, their functions, classification of seaports.

+ Principles for the planning and development of the seaport system, investment, building and commercial operation of seaports.

+ Provisions on the opening and closure of seaports, maritime safety, maritime security and prevention of environmental pollution in seaports.

+ Provisions on the functions and tasks of the authorities performing the specialized State management over maritime activities in seaports, principles for coordination of activities of specialized State management bodies in seaports.

+ To remove inappropriate concepts like “navigable zone.”

– On maritime services: To revise provisions on other maritime services such as those on pilotage, shipping agency, salvage and recovery of sunken property, maritime insurance. Specifically:

+ Provisions on towage on sea, support towage in seaports; towage command; liability to pay compensation for losses occurring in the towage process…

+ Provisions on salvage contracts; responsibilities of the involved parties to maritime salvage contracts; special charges for salvage related to environmental protection; the right to arrest ships and keep recovered sunken property…

+ Provisions on the obligations to recover sunken property; classification of sunken property, time limit for handling of sunken property….

+ Provisions on the applicable subjects; statute of limitations for initiating lawsuits related to collision accidents; joint responsibilities for making compensation for loss of human life, injuries or health damage…

+ Provisions on damages not included in general average; right to declare general average, etc.

+ The responsibility limitation should change from complying with the 1957 Convention on the Limitation of Liability of Owners of Seagoing Ships to complying with the 1976 Convention on the Limitation of Liability for Maritime Claims (LLMC 1976).